July 26 (Bloomberg) -- A U.S. jury’s $104.7 million damage
award against Exxon Mobil Corp. for contaminating New York City
wells with the gasoline additive MTBE was upheld by a federal
appeals court.

The award for compensatory damages to clean up contaminated
wells was proper, the U.S. Court of Appeals in Manhattan said in
a ruling today, denying Exxon Mobil’s challenge to the 2009
verdict. The Irving, Texas-based company said it plans to appeal
the ruling to the U.S. Supreme Court.

“We reject Exxon’s argument that the jury’s verdict
conflicts with and is therefore pre-empted by the Clean Air Act
Amendments of 1990,” the appeals panel said, adding that the
jury properly offset the award by amounts attributed to cleanup
of other contaminants.

New York sued Exxon Mobil and other oil companies in 2003,
alleging that they knew the gasoline additive methyl tertiary
butyl ether, or MTBE, would pollute groundwater. Exxon Mobil
argued that state laws are pre-empted by the Clean Air Act,
which required oil companies to reformulate gasoline to reduce
air pollution from vehicle emissions. Oil companies added MTBE
to make it burn more thoroughly.

“MTBE has not been used for seven years, cleanup
successfully continues and the myriad of data shows MTBE
detections decreasing,” Todd Spitler, a spokesman for Exxon
Mobil, said in an e-mail. The company “will be filing an appeal
to the United States Supreme Court,” he said.

Consolidated Cases

This case is one of scores around the country by
municipalities, states and individuals against oil refiners,
distributors and retailers over MTBE. Many, including New York
City’s, were consolidated in New York federal court for
evidence-gathering.

A state appeals court in Maryland in February reversed two
jury awards totaling $1.65 billion against Exxon Mobil over MTBE
contamination, ruling that the company hadn’t made fraudulent
statements and the property owners who sued hadn’t demonstrated
physical harm.

A jury in New Hampshire state court in April ordered Exxon
Mobil to pay $236 million in damages for contaminating
groundwater with MTBE. The company has appealed that verdict.

The New York jury determined that it would cost
$250.5 million to treat the water and remove MTBE, which can
give water a bad odor and taste and cause cancer in rodents.

No Punitives

U.S. District Judge Shira Scheindlin ruled that Exxon Mobil
shouldn’t be liable for the entire cleanup cost because the
wells contained pollutants not from gasoline. She also denied
punitive damages because the company hadn’t recklessly
disregarded risks. The wells hadn’t been used for drinking
water.

The appeals court today rejected cross-appeals by the city.
It said the lower court was correct both in ordering that the
damage award take into account pollution from other sources and
in denying punitive damages.

The appeals court rejected Exxon Mobil’s request for a
retrial on the ground of juror misconduct. The company argued
Scheindlin should have declared a mistrial after one juror
complained that she was threatened by another. The threatened
juror was released while the one who allegedly made the threat
was not. Exxon Mobil claimed the dismissed juror was harassed
because her opinion differed from fellow jurors’.

The trial lasted 11 weeks and the jury deliberated for 11
days. It focused on a representative sample of five wells in the
New York City neighborhood of Jamaica, Queens. All other
defendants had settled with the city.

The appeal is In re Methyl Tertiary Butyl Ether Products
Liability Litigation, 10-4329, U.S. Court of Appeals for the
Second Circuit (Manhattan).